Warren's Healthcare Plan Would Pay Physicians at Medicare Rates

Alicia Ault

November 01, 2019

Democratic presidential candidate Elizabeth Warren says that to help fund her Medicare-for-all plan — which would eliminate private insurance — she would pay physicians and hospitals at roughly the current Medicare rates and aggressively negotiate discounts from pharmaceutical companies.

The Massachusetts senator claims that her plan — the details of which she released today — would cost an estimated $52 trillion over 10 years (with $20.5 trillion in new federal spending), and would also be paid for by taxing financial transactions, levying an "ultra-millionaire" tax, and reining in defense spending.

In addition, instead of paying insurance companies for workers' healthcare — which Warren says would amount to $11 trillion over 10 years — employers would pay a $9 trillion Medicare-for-all tax.

The plan would require no new taxes on the middle class, the candidate contends.

Warren's estimates were assembled in part by Donald Berwick, MD, president emeritus of the Institute for Healthcare Improvement and administrator of the Centers for Medicare and Medicaid Services under President Barack Obama, and Simon Johnson, Ronald A. Kurtz Professor of Entrepreneurship at the MIT Sloan School of Management.

"These experts conclude that my plan would slightly reduce the projected amount of money that the United States would otherwise spend on health care over the next 10 years, while covering everyone and giving them vastly better coverage," Warren said.

Robert Laszewski, a long-time Washington observer with Health Policy and Strategy Associates, said, "The numbers kind of work," but that the plan is so complex with so many moving parts that it's politically untenable.

"I just think that there's a zero chance that single payer is going to pass," Laszewski told Medscape Medical News.

He said that Warren's proposals would amount to an average 22% reduction in pay for most physicians, with some specialties seeing an even bigger pay cut. Hospital reimbursement would be cut in half, he said.

Warren's proposals would amount to an average 22% reduction in pay for most physicians, with some specialties seeing an even bigger pay cut.

Less Overhead = Better Pay?

Warren said her plan would reduce administrative spending and waste. Private insurers spend 12% of premiums on administration, while that figure is 2.3% for Medicare, she said, using that number as her plan's benchmark to set net administrative spending.

"The improved efficiency will save doctors time and money — helping significantly offset the revenue they will lose from getting rid of higher private insurance rates," Warren said.

Laszewski doesn't buy it. "There's as much hassle for doctors in Medicare as there is in private insurance," he said.

Warren also promised to increase reimbursement for primary care physicians, while cutting pay for what she called "overpaid specialties," as defined by a Medicare Prospective Payment Assessment Commission report done for the Medicare Payment Advisory Commission in January 2019.

In addition, Medicaid reimbursement would be raised to Medicare pay rates.

Big Blow for Hospitals

Warren is proposing to pay hospitals an average of 110% of current Medicare rates, with adjustments for rural hospitals, teaching hospitals, and others "with challenging cost structures," according to the plan.

She contends that will cover current costs of care, and that hospitals will see a reduction in costs because of simpler administrative processes, lower drug prices, the elimination of uncompensated care, and a higher volume of patients.

Laszewski, however, notes that without private insurance, hospitals will be losing a higher rate of pay that accounts for 60% of their business. "They're not going to get more, they're going to get a hell of a lot less," he said.

Warren is also proposing to strictly regulate consolidation among hospitals, contending that bigger entities are anticompetitive. "I will direct my [Federal Trade Commission] to block all future hospital mergers unless the merging companies can prove that the newly-merged entity will maintain or improve care," she said in her plan.

The American Hospital Association (AHA) expressed concern. "Hospitals are already paid far less than the cost of caring for Medicare patients — and patients on an underfunded system would strain hospitals even more — and could threaten access to care and hospitals' survival," said Tom Nickels, AHA executive vice president.

"Further, the government can be an unreliable business partner and has a history of using provider payments for other programs to meet its budgetary goals," he said, in a statement emailed to Medscape Medical News.

"The AHA believes there is a better alternative to help all Americans access health coverage — one built on improving our existing system rather than ripping it apart and starting from scratch," he said.

When asked for comment, the American Medical Association noted that it does not support or endorse presidential candidates, and thus does not comment on candidates' proposals.

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